Dollar, Stocks Down; Oil Above $110

123jump.com Staff
12 Mar, 2008
New York City

U.S. stocks fell in the final hour of trading as investors worried that the recent plan from the Fed may not save the economy from slipping into a recession. Banks and brokerage stocks fell in the final hour of trading. Crude oil jumped to a new high above $110 as dollar reached a new low against euro. Humana lowered its earnings estimate but Caterpillar guided the annual earnings higher. Airlines stock reached a new low on the rise in crude oil and analyst downgrade.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – U.S. stocks fell in the final hour of trading after rising as much as 1% in the morning. Oil closed at a new high as the dollar dropped to a new low against euro and yen.[/R]

Global Markets Update

A day after the Federal Reserve move to flood credit markets with fresh money traders began to wonder how effective this plan will be. Traders and economists are increasingly questioning that this money is not likely to pass down in the economy beyond the bank balance sheets. Banks and brokers fell today. Oil reached a new intra-day high of $110.20 in New York trading. Airline stocks fell to a new low on the rising oil prices and worries related to economic slowdown.

U.S. stock averages traded 1% higher, a second day advance on the positive earnings guidance. Caterpillar reaffirmed its earnings rise in 2008 between 15% and 20% and sales gain between 5% and 15% on the strength in the global demand. Immucor, blood transfusion systems developer fell 31% after making a cash acquisition for $117 million. Financial stocks gained for the second day after the Fed plan to pump liquidity. Humana plunged 27% on the lowered earnings forecast.

Humana, health insurance provider lowered its earnings estimate for the first quarter by half between 44 and 46 cents. For the full year Humana estimated earnings between $4.00 and $4.25 from $5.35 and $5.55 per share. The company lowered its operating margins, cash flow and gave a cautious guidance on revenue.

The U.S. dollar dropped to a record low against euro to $1.5557 and against yen to 101.71. Traders are increasingly worried that the recent coordinated action may not save the slowing U.S. economy and dollar is likely to reach as low as $1.65 in the next six months.

Fourth quarter economic growth in Japan was reported by the Cabinet office at 3.5% beating the estimates of 2.2% or more. The sharp rise in GDP was driven by consumption and growing exports. Separately, The Bank of Japan reported domestic corporate goods price index rose 3.4% in February and export price index fell 5.2%. Nikkei 225 index gained 2.29% or 259.6 at 12,947.88, and the broader Topix Index rose 1.6% or 19.98 to 1,255.13.

In Hong Kong trading Hang Seng Index rose 2% or 427.41 to 23,422.76, and the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, advanced 2.3%, or 288.61 to 12,877.35. The U.S. Fed led liquidity move to encourage trading in mortgage markets lifted stocks in the U.S, Canada, Europe, Japan, Australia, and Hong Kong. However, the HK government indicated that rate reduction in tandem with the U.S. action at the end of this month is not likely.

The Reserve Bank of Australia in conjunction with the Federal Reserve Bank in the U.S. and other Central banks in Europe and Canada indicated a plan to add liquidity to the credit markets. The news sent stocks in the U.S., Hong Kong, Europe, Canada, and Australia higher. The plan is expected to bolster market confidence and encourage mortgage lending and stem the rising mortgage rates denominated in the U.S. dollar, but traders seem to question the effectiveness of the move on the second day of the announcement.

European Markets

In London FTSE 100 Index closed higher 86.00 or 1.51% to 5,776.40, in Paris CAC 40 index increased 69.41 or 1.50% to close at 4,697.10 and in Frankfurt DAX index higher 74.80 or 1.15% to close at 6,599.37. In Zurich trading SMI increased 102.03 or 1.43% to close at 7,245.04.

North American Markets indexes

Dow Jones Industrial Average declined 46.57 or 0.38% to a close of 12,110.24, S&P 500 closed down 11.88 or 0.90% to 1,308.77, and Nasdaq Composite Index fell 11.89 or 0.53% to a close of 2,243.87. In Toronto TSX Composite closed down 47.18 or 0.35% to 13,297.35.

Of the 30 stocks in Dow Jones Industrial Average, 11 closed higher, 19 closed lower, and none were unchanged.

Caterpillar led the gainers in the index with a rise of 3.6% followed by increase in General Electric of 1.7%, in Disney of 0.7%, and in 3M of 0.6%. General Motors led the decliners in the index with a loss of 3.9% followed by losses in American Express of 2.5%, in Microsoft of 2.2%, and in AT&T of 2.2%.

Of the stocks in S&P 500, 141 closed higher, 356 fell, and 3 were unchanged. Of the index stocks, 16 rose more than 3% and 61 stocks fell more than 3%.

MGIC Investment Corp led the decliners in the index with a loss of 14% followed by decreases in Humana of 13.7%, in Ambac of 11.2%, in KLA-Tencor of 9.8%, Tesoro of 9.7%, and in Progressive Corp of 8.7%. Cameron International led the gainers in with a rise of 6.5% followed by increases in JDS Uniphase of 5.37%, in VF Corp of 4.5%, in Aetna of 4.45%, and in New York Times of 4.3%.

South American Markets Indexes

In Latin Markets Venezuela led the gainers in the region with a rise of 3.24% followed by increases in Chile of 2.64%, in Peru of 1.62%, and in Colombia of 0.39%.

Mexico led the decliners in the region with a loss of 0.6% followed by losses in Argentina of 0.5% and in Brazil of 0.3%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 202.85 or 1.60% to 12,861.13, in Hong Kong Hang Seng index increased 427.41 or 1.86% closed to 23,422.76. Australia ASX 200 index increased 123.70 or 2.41% to close 5,257.90. In Malaysia KL Composite index increased 26.05 or 2.16% closed to 1232.59.

In South Korea Kospi Index increased 17.35 or 1.06% to close at 1,658.83, in Thailand SET index closed higher 7.17 or 0.87% to 827.00 and Indonesia JSE Index edged increased 32.71 or 1.30% to 2,556.24. Sensex index in India decreased 4.83 or 0.03% to 16,127.98.

Bond Yields decreased on 10-year U.S. bonds to 3.45% and on 30-year bonds declined to 4.39%.

Commodities, Metals, and Currencies

Crude oil increased $1.37 to close at $110.12 per barrel for a front month contract, natural gas increased 4 cent to $10.04 per mBtu, and gasoline futures increased 0.49 cents to close at 273.10 cents per gallon.

Gold increased $4.50 in New York trading to close at $980.50 per ounce, silver closed up 23 cents to $19.95 per ounce, and copper for front month delivery increased 5.15 cents to 383.70 per pound.

Wheat futures increased 59.00 cents in Chicago trading and closed at $12.82 per bushel. Sugar decreased 26 cent to 13.19 cents per pound. Soybean future closed up 12.750 cents to $13.95 per bushel.

Dollar edged lower and traded near a record low against euro to $1.5557 and edged lower against yen to 101.71.